The British pound fell 1.22% lately to trade below the major 1.2400 support area against the US dollar. The bears took control of the price after UK’s Office for National Statistics reported a significantly higher Consumer Price Index data.
The Consumer Price Index (CPI) figures landed at 9.0% for April month, which is much higher than the 7.0% for March 2022. If we talk about it on a monthly basis, then CPI rose by 2.5% in April 2022, compared with a rise of 0.6% in April 2021. The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 7.8% in the 12 months to April 2022, up from 6.2% in March.
The highest upward contributions to the annual inflation rate including owner occupiers’ housing costs in April 2022 came from housing and household services (2.76 percentage points, principally from electricity, gas, and other fuels, and owner occupiers’ housing costs) and transport (1.47 percentage points, principally from motor fuels and second-hand cars).
The major upward contributions to the change in the CPIH 12-month inflation rate between March and April 2022 came from housing and household services (1.27 percentage points), restaurants and hotels (0.11 percentage points), recreation and culture (0.10 percentage points), with the largest partially offsetting downward contribution from clothing and footwear (0.09 percentage points).
According to financial analysts, expensive commodities and energy prices are diminishing the income of individuals and overall households. Consequently, the Bank of England is expected to hike the interest rates next month to combat inflation. This in turn will dampen the economic growth of the UK.
From a technical perspective, the 1.2400 Will now continue to act as a major resistance level as this area had proved itself to be a major support zone on the daily chart. However, we can expect a minor pullback as the US dollar index inched down today after posting a massive gain in the previous session. If bulls can break above the 1.2400 level, then we may continue to go much higher in the near term.